Need payment processing for your collection agency merchant account?

Debt Collection or Collection Agency Merchant Account

The debt collection agency industry is one that grossed over $10.4 billion in 2013, domestically, collecting $55.2 billion in acquired debt, and these numbers just continue to grow with every passing year (approximately 15% each year since). And with the average American household having reportedly $130,000 in debt, it’s clear why the debt collection business is such a profitable one. If you thinking about capitalizing on this industry, you need to seek merchant account services for collection agencies before launching your business. The collection agency industry is considered high risk, and if you need collection agency credit card processing solutions, you need to know how to secure a high risk collection agency merchant account.

PayKings pride themselves on being the go-to processing company for debt collection agency merchant accounts and merchant account services for collection agencies within this industry, including:

• Debt collection agencies
• Debt buyers
• Debt purchasers in the healthcare, commercial, and attorney spectrum
• Corporate collection and retail departments

While this industry is one that shows its worth in the numbers, collection agency credit card processing is considered high risk due to a few particulars in the industry. A business is considered high risk for a variety of reasons, but the biggest drawbacks for these merchants is in having a difficult time finding a reliable processing partner. Luckily, PayKings specialize in working with high risk merchants and we have multiple acquiring banking partners that offer debt collection merchant accounts.

Here’s a Common Scenario

If you’ve applied for collection agency credit card processing to get a collection agency merchant account before, you have likely been told that the person responsible for whether or not you get approved, and with what conditions (e.g. rolling reserve, financing delay, transaction caps, monthly caps, etc.) will be based on the individual underwriter assessing your account. And that is generally true, therefore it is important to understand exactly what this decision maker is searching for.

An underwriter’s job is to protect the debt collection credit card processor from losses, which may take the form of unpaid chargebacks, yearly fees, or regulatory losses from the card manufacturers (Visa, MC, AmEx, Discover) or by a local, state, or national government body.

When underwriters are considering your business, they’re trying to ascertain how serious the risk of loss is by allowing your collection agency merchant account to process through them. Specifically, they’re looking to make sure you’re only operating from the countries or regions that you are licensed in, that you are complying with applicable laws, particularly the Fair Debt Collection Practices Act (FDCPA), that you are supplying clear receipts and otherwise being transparent with your customers, and that you have a very clear business model.

Obviously a high risk payment processor that takes on collection agency merchant accounts is well aware that few businesses have everything figured out perfectly, but the greater case you can present that your company is well-capitalized, has a good business model and is currently working legally and sensibly, the more probable your debt collection merchant account application is going to be approved.

How Does Being High Risk Affect Collection Agency Credit Card Processing?

Among the many reasons that smaller companies get shut down with their chosen credit card processors is not because they are scammers or operating a poorly run business, it is typically because they don’t know how to properly calculate their chargeback ratio, and they don’t understand what a suitable chargeback ratio is.

So, here’s the answer…

Your company’s chargeback ratio is the total count of chargebacks in a month divided by the total amount of sales transactions in the month.

Be aware the number is not calculated by the number of chargebacks you might have lost, won, fought or didn’t fight. The relevant number is in exactly how many of your customers called their issuing bank and initiated a chargeback. That’s it. You can’t “win” enough chargebacks to decrease the ratio, because the number of wins doesn’t go into the calculation.

Therefore, if your debt collections merchant account has 100 sales transactions in a month and four customers in that exact same month call their issuing bank to initiate a chargeback, you’ve got a 4% chargeback ratio for that month – regardless of whether those clients were right, wrong, or otherwise.

The Reasons are Below:

Collection agency merchant accounts are considered high risk due to the following reasons.

• Reputational risk
• Dissatisfaction with services delivered
• Recurring or continuity billing model

So, where can you turn when your chargeback ratio is too high and traditional banks won’t approve your debt collection account? Who can you trust to get your business set up with the payment processing you need?

This is a pretty easy question to answer – you come to PayKings, where we make apply for your collection agency account as seamless as possible, and with our own in-house underwriting team and hundreds of banking relationships, we can get you approved and set up to accept credit card payments in no time.

Why Does this Matter and How Can PayKings Help Me Get Merchant Account Solutions for Collection Agencies?

At PayKings, we provide comprehensive high risk collection agency credit card processing solutions ranging from startups to businesses that process tens of millions of dollars a month, and those that range from debt buyers buying charged-off debt to agencies collecting on behalf of the card brands and Fortune 500 companies.

If you owned a brick and mortar retail organization, nearly every bank and credit card processor would be more than happy to offer you collection agency credit card processing. Unfortunately, for the debt collection industry, especially those applying for a debt collection agency merchant account, that is not the case.

It’s not that these payment aggregates and traditional banks don’t want your business (or its commission), but rather because their sponsor bank or their credit card processor will not write collection agency merchant accounts due to the regulatory and chargeback risk.

You don’t have to go through the run around of applying with several banks only to get declined – PayKings makes getting approved for a debt collection agency merchant account simple. Just fill out our quick and easy form to get started by clicking here.